Absolute return convertibles strategy
Our absolute return convertible bond strategy seeks to generate attractive risk-adjusted returns that demonstrate low correlation to bond and equity markets and contain volatility, through investment in a focused portfolio of long positions in convertibles paired with dynamic equity hedges.
Investors can access our absolute return convertible bond capabilities through the BNY Mellon Absolute Return Global Convertible Fund.
Seeking strong risk-adjusted returns: Through combining the defensive characteristics of convertible bonds with robust credit and equity analysis, we believe the strategy has the ability to deliver strong risk-adjusted returns throughout the market cycle.
Opportunity set: A number of different factors have led to convertible bond issuance increasing to levels not seen in over a decade, with significant growth in potential opportunities for active investors.
Highly experienced team: The strategy’s management team has over 20 years’ experience of managing convertible bond strategies including hedge funds and absolute return mandates. In managing the strategy, the team draws upon Insight’s wider investment resources in equity and credit research, quantitative analysis and risk management.
Investment in any strategy involves a risk of loss which may partly be due to exchange rate fluctuations.
Currency hedging techniques aim to eliminate the effects of changes in the exchange rate between the currency of the underlying investments and the base currency (i.e. the reporting currency) of the portfolio. These techniques may not eliminate all the currency risk.
Derivatives may be used to generate returns as well as to reduce costs and/or the overall risk of the portfolio. Using derivatives can involve a higher level of risk. A small movement in the price of an underlying investment may result in a disproportionately large movement in the price of the derivative investment.
Investments in bonds are affected by interest rates and inflation trends which may affect the value of the portfolio.
Where high yield instruments are held, their low credit rating indicates a greater risk of default, which would affect the value of the portfolio.
Where leverage is used through the use of swaps and other derivative instruments, this can increase the overall volatility. Any event that adversely affects the value of an investment would be magnified if leverage is employed by the portfolio and losses would be greater than if leverage were not employed.